CEO and primary shareholder Eddie Lampert says the company’s pension plan is to blame for its current financial problems with more retirees now ‘on the books’ than employees
Sears Holdings Corp would have to sell more real estate and restructure its debt, Chief Executive Officer Eddie Lampert’s hedge fund said in a regulatory filing, as the retailer looks to avoid bankruptcy.
The one-time American retail giant has struggled to transform its business in the face of declining foot traffic at brick-and-mortar stores and this month again warned about its ability to continue as a going concern.
To stem losses, the debt-laden company has closed hundreds of stores since last year and tried to sell assets.
Lampert had earlier said the company should sell its Kenmore appliances brand, home improvement businesses, and real estate, adding that his hedge fund ESL Investments Inc would bid in any sale.
The hedge fund, in the filing made public on Monday, urged the retailer’s board to sell $1.5 billion more in real estate and restructure $1.1 billion in debt.
Sears is struggling to compete with online retailers like Amazon and Walmart. Its retirees’ pensions also face their own funding shortfall of $1.5 billion
Sears said it has referred ESL’s proposal to a special committee exploring the hedge fund’s proposal to acquire Kenmore.
Lampert and his fund ESL are the company’s two largest shareholders, according to Thomson Reuters data.
In recent decades, Sears, which was the world’s largest retailer in the 1960s, has struggled in the face of declining foot traffic at its brick-and-mortar stores.
Lampert’s latest attempts may provide a short-term life line, but analysts said that it is not a sustainable plan for a company that has failed to reinvent itself in an era of online shopping.
Sears, which hasn’t turned a profit since 2010, last year posted a loss of $383 million. Sales dropped 25 percent to $16.7 billion.
In another attempt to avoid bankruptcy, money-losing Sears last year sold its Craftsman tool brand to power tool maker Stanley Black & Decker for $900 million.